Did Hedge Funds Catch A Break With Invitation Homes Inc. (INVH)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Invitation Homes Inc. (NYSE:INVH) and determine whether the smart money was really smart about this stock.

Invitation Homes Inc. (NYSE:INVH) has seen an increase in hedge fund sentiment in recent months. Invitation Homes Inc. (NYSE:INVH) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 33 hedge funds in our database with INVH positions at the end of the second quarter. Our calculations also showed that INVH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the fresh hedge fund action encompassing Invitation Homes Inc. (NYSE:INVH).

David E. Shaw of D.E. Shaw

Do Hedge Funds Think INVH Is A Good Stock To Buy Now?

At third quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in INVH over the last 25 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

Among these funds, Echo Street Capital Management held the most valuable stake in Invitation Homes Inc. (NYSE:INVH), which was worth $164.4 million at the end of the third quarter. On the second spot was Long Pond Capital which amassed $102.7 million worth of shares. D E Shaw, Millennium Management, and V3 Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position V3 Capital allocated the biggest weight to Invitation Homes Inc. (NYSE:INVH), around 8.92% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, dishing out 4.67 percent of its 13F equity portfolio to INVH.

As one would reasonably expect, key money managers were leading the bulls’ herd. Renaissance Technologies, created the most outsized position in Invitation Homes Inc. (NYSE:INVH). Renaissance Technologies had $23.8 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $19.2 million investment in the stock during the quarter. The following funds were also among the new INVH investors: Sander Gerber’s Hudson Bay Capital Management, Matthew L Pinz’s Pinz Capital, and Benjamin A. Smith’s Laurion Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Invitation Homes Inc. (NYSE:INVH) but similarly valued. We will take a look at Catalent Inc (NYSE:CTLT), Ginkgo Bioworks Holdings Inc. (NYSE:DNA), Royal Caribbean Cruises Ltd. (NYSE:RCL), Magna International Inc. (NYSE:MGA), CNH Industrial NV (NYSE:CNHI), Extra Space Storage, Inc. (NYSE:EXR), and Northern Trust Corporation (NASDAQ:NTRS). This group of stocks’ market valuations match INVH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $1383 million. That figure was $825 million in INVH’s case. Catalent Inc (NYSE:CTLT) is the most popular stock in this table. On the other hand CNH Industrial NV (NYSE:CNHI) is the least popular one with only 25 bullish hedge fund positions. Invitation Homes Inc. (NYSE:INVH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INVH is 80.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on INVH as the stock returned 10% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.